Apple denies e-book pricing scheme

Apple on Thursday denied a charge that it schemed with publishers to hike prices for e-books, portraying itself as a hero for prying Amazon's "monopolistic grip" from the market. "The DOJ's accusation of collusion against Apple is simple not true," Apple spokesman Tom Neumayr said in an emailed statement a day after a Department of Justice antitrust suit was filed. "The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry." The Justice Department sued Apple and five publishing firms Wednesday alleging a conspiracy to raise prices and limit competition for e-books. It immediately announced a partial settlement in the case. Officials said three of the publishers agreed to end the scheme to force retailers such as Amazon to accept a new pricing plan that ended their ability to offer discounts for electronic books. Hachette Book Group, HarperCollins and Simon & Schuster reached a settlement but the case will proceed against Apple and the other two -- Macmillan and Penguin Group -- "for conspiring to end e-book retailers' freedom to compete on price," the Justice Department said. Attorney General Eric Holder said that as a result of the conspiracy, "consumers paid millions of dollars more for some of the most popular titles," and competition was eliminated. Prior to the introduction of Apple's iPad, online retail giant Amazon sold electronic versions of many new best sellers for $9.99. After Apple's "agency" model was adopted, the prices rose to $12.99 and higher, the suit said, and price competition among retailers was "unlawfully eliminated." Sharis Pozen, head of the Justice Department's antitrust division, said the scheme was aimed at ending a discounting effort by Amazon. She said executives in the conspiracy "knew full well what they were doing. That is, taking steps to make sure the prices consumers paid for e-books were higher." The move almost instantly raised the prices consumers paid for e-books, she said. "Just as we've allowed developers to set prices on the App Store, publishers set prices on the iBookstore," Neumayr said. The suit filed in US District Court in New York said a conspiracy dating back to 2009 involved "schemes to limit Amazon's ability to discount e-books." Named in the suit with Apple were CBS Corp.'s Simon & Schuster; Hachette Book Group, part of France's Lagardere; the British-based Pearson's Penguin Group; Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck; and News Corp. unit HarperCollins. Amazon on Wednesday hailed the settlement and said it would mean lower prices for e-books for its Kindle reader. "This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books," said Amazon spokesman Drew Herdener. But Macmillan chief executive John Sargent said his firm would fight the settlement because "the terms the DOJ demanded were too onerous" and would allow Amazon "to recover the monopoly position it had been building before our switch to the agency model." The lawsuit comes amid probes on both sides of the Atlantic over the efforts to limit discounting on electronic books, which had been dominated by Amazon until Apple launched its iPad in 2010.